Bitcoin is worse than a Ponzi scam since it is never-ending, according to an Oxford University expert

Robert McCauley, an associate member of the University of Oxford’s Faculty of History, has stated that, despite being dubbed the best performing asset of 2021, Bitcoin is ‘worse’ than the notorious Ponzi scam.

McCauley remarked in a Financial Times opinion piece that comparing Bitcoin to a Ponzi scheme is an understatement since both have a different conclusion and are ‘seriously negative-sum.’

According to the professor, investors who acquire Bitcoin are not motivated by the need to generate money, but it is a zero-coupon investment for long-term returns since it makes no guarantees.

According to McCauley, Bitcoin lacks the fundamentals necessary for investors to profit unless they sell their holdings. Additionally, he predicted that the collapse of Bitcoin will be more disastrous than the fall of the Ponzi scheme, which started a series of events.

Stablecoins may be the catalyst for Bitcoin’s demise.

Notably, he mentioned the collapse of dollar-pegged stablecoins as a significant weakness for Bitcoin. According to McCauley, the collapse of stablecoins with a sizable market cap has the potential to destabilise the whole crypto ecosystem.

“These so-called “unregulated money market funds” have been marketed as dollar-denominated products with secure assets equal to their outstanding obligations. Given the absence of regulation and transparency, it’s not difficult to see a large stablecoin “breaking the buck,” McCauley said.

He continued by comparing Bitcoin’s cash flow to that of a penny stock pump-and-dump operation, which is based on the Ponzi scheme. The researcher said that investors bought Bitcoin, which he described as worthless, because it appeals to investors’ drive for profit.

McCauley thinks that fear of missing out will act as a fuel for Bitcoin’s continuous cycle of pumping and dumping. As a result, he believes the cycle will result in a different outcome for Bitcoin, unlike the Ponzi scam.

Additionally, he noted that Bitcoin is a resource-intensive asset, in contrast to a Ponzi scheme. McCauley believes that Bitcoin’s energy consumption associated with mining is a worry, making it potentially more devastating than the Ponzi scam.

As with the Ponzi scheme, McCauley adds that the Bitcoin environment benefits just a few individuals. He singled out miners, claiming they are assured earnings as long as the network is operational.

With Satoshi Nakamoto, the inventor of Bitcoin, staying unidentified, McCauley warned that in the event of a loss, investors would have no central figure to pursue.

McCauley now joins the growing list of academics who have questioned Bitcoin’s place in the financial system. As Finbold previously observed, Eswar Prasad, a prominent professor of international politics at Cornell University, argued that the asset’s existence may not continue long. According to Prasad, Bitcoin is inefficient and incapable of facilitating transactions.

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